Canadian mining firm Ascot Resources (TSX:AOT,OTCQX:AOTVF) is pressing forward with a financing strategy aimed at getting back on course at its Premier Northern Lights and Big Missouri mines.
The company said on Monday (November 11) that it has applied to the Toronto Stock Exchange (TSX) for a financial hardship exemption. This would allow it to secure financing under conditions that typically require shareholder approval.
With a combined target of approximately C$52 million, Ascot said it is looking to advance the development of Premier Northern Lights, restart the mill at the site and restart the Big Missouri mine.
Ascot poured its first gold at BC-based Premier Northern Lights in April, and said at the time that the asset was expected to start commercial production in the third quarter of this year. However, at the beginning of September, the company suspended operations, saying that it needed to focus on mine development in order to ensure sufficient ore.
"After careful consideration, the Company has decided that, to enable sufficient mine development, it will suspend operations. Ascot will focus on mine development until the combination of the Big Missouri and PNL mines can sustainably deliver enough ore feed to profitably run the operation.
The Company’s intention is to seek funding to complete the necessary mine development."
Ascot said in this week's press release that its financing is structured in two main components: an equity financing through a brokered private placement, and debt financing secured with its existing creditors.
For the equity financing, Ascot has set up an agreement with a syndicate led by Desjardins Capital Markets and BMO Capital Markets. These parties will act as agents for a brokered private placement of common shares.
Ascot is aiming to raise between C$25 million and C$42 million by offering shares at C$0.16 each. Closing is contingent on multiple conditions, including the completion of definitive agreements for the debt financing and TSX approval.
On the debt side, Ascot has entered into non-binding term sheets with Sprott Private Resource Streaming and Royalty (B), as well as Nebari Gold Fund 1, Nebari Natural Resources Credit Fund II and Nebari Collateral Agent.
Sprott has agreed to modify an earlier agreement and provide US$7.5 million to Ascot in advance; the deal also increases the stream percentage Sprott has on Ascot’s gold and silver production. Ascot has the option to buy back this additional share for US$9.7 million by December 31, 2026, while Sprott can trigger a buyback starting on January 1, 2027.
When it comes to the Nebari entities, they have given Ascot more lenient debt repayment terms, although Ascot has agreed to various points, including a higher interest rate on its existing cost-overrun credit agreement. Nebari will also receive a US$1 million alignment fee from Ascot, to be paid in common shares of the company.
Ascot has emphasized that these financing arrangements remain subject to the completion of definitive agreements, as well as approval from the TSX for a financial hardship exemption. The company has also indicated that further changes could arise as it works to finalize the necessary approvals and terms with its creditors.
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
